729 F.

2d 301

34 Fair Empl.Prac.Cas. 373,

33 Empl. Prac. Dec. P 34,208
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,
Appellant,
v.
The HENRY BECK COMPANY, Appellee.
No. 83-1016.

United States Court of Appeals,

Fourth Circuit.
Argued Oct. 31, 1983.
Decided March 7, 1984.

Justine S. Lisser, Washington, D.C. (David L. Slate, Gen. Counsel, Philip

B. Sklover, Associate Gen. Counsel, Vella M. Fink, Asst. Gen. Counsel,
Washington, D.C., on brief), for appellant.
Edward J. Gutman, Baltimore, Md. (Rochelle S. Eisenberg, Blum,
Yumkas, Mailman & Gutman, P.A., Baltimore, Md., Larry Lesh, Locke,
Purnell, Boren, Laney & Neely, Dallas, Tex., on brief), for appellee.
Before WINTER, Chief Judge, PHILLIPS and ERVIN, Circuit Judges.
ERVIN, Circuit Judge.

The Equal Employment Opportunity Commission (the Commission) brought

this action in the United States District Court for the District of Maryland
seeking specific performance and consequential damages from the Henry C.
Beck Co. for allegedly breaching a pre-determination settlement agreement
entered into between the Commission, Beck, and a former employee of Beck's,
Donna L. Black. Pursuant to F.R.Civ.P. 12(b)(1), Beck filed a motion to
dismiss for lack of subject matter jurisdiction. The district court granted the
motion on the ground that Sec. 706(f)(1) of Title VII 1 requires investigation,
reasonable cause determination, and attempts at conciliation before a federal
court may exercise jurisdiction over a suit brought by the Commission under

Title VII.
2

On appeal, the Commission argues that Title VII's general jurisdictional

provision, Sec. 706(f)(3)2 , allows for federal jurisdiction over actions to enforce
pre-determination settlement agreements. Because we agree that Sec. 706(f)(3)
provides a basis for jurisdiction in this case, we reverse the district court and
remand for further proceedings.

I.
3

On March 28, 1980, Donna L. Black filed a charge with the Commission
claiming that the Henry Beck Company had discriminated against her on the
basis of her race when it denied her a full-time secretarial position and
discharged her from her part-time position. On May 9, 1980, before the
Commission issued a reasonable cause determination, the parties and the
Commission signed a settlement agreement. Paragraph 2c of the agreement, the
subject of this action, provided in relevant part that for six months Beck would
"reserve the next available vacancy for the position of Secretary at Henry C.
Beck's downtown location ..." for Black. In exchange for Beck's agreement,
Black agreed not to bring suit and the Commission promised it would not use
Black's "charge as the jurisdictional basis for a civil action under Section 706(f)
(1) of Title VII."

The Commission alleges in its complaint that Beck Co. breached paragraph 2c
of the settlement agreement by failing to offer Black the first available position
as secretary. The Commission's prayer for relief requests the district court to
issue injunctive orders requiring Beck Co. to comply with paragraph 2c by
offering Black the next available secretarial position. Additionally, it requests
the court to order back and front pay as damages for Beck's failure to comply
with the settlement agreement and to award the Commission costs.

II.
5

The statutory framework for processing unfair employment practice charges

filed with the Commission is set forth in Sec. 706(b) of Title VII.3 When a
charge against an employer is filed, the Commission is to serve notice on the
employer and make an investigation of the allegations. If, after investigation,
the Commission determines that there is not reasonable cause to believe the
allegations are true, it must dismiss the charge and notify all parties. If, on the
other hand, the Commission determines there is reasonable cause, it must
initially try to eliminate the alleged unlawful employment practice through
conciliation and persuasion. Should the Commission fail to secure an acceptable

conciliation agreement from the employer within thirty days after the charge is
filed, it may bring suit in a United States District Court under Sec. 706(f)(1)
alleging an unlawful employment practice.
6

The settlement agreement in this case was reached pursuant to the

Commission's "Rapid Charge Processing System" adopted in 1977. This
system, which is designed to encourage pre-investigation stipulations and
settlements, was the Commission's response to an increasing backlog of
charges resulting from time consuming investigations.4 The new system has
had considerable success in increasing the percentage of claims settled and in
reducing the number of investigations needed.5

The Commission's regulations6 reflect the changes in post-filing procedures

brought about by the Rapid Charge Processing System. Specifically, 29 C.F.R.
Sec. 1601.20 provides that "[p]rior to the issuance of a determination as to
reasonable cause the Commission may encourage the parties to settle the
charge on terms that are mutually agreeable .... The Commission shall limit its
undertaking in such settlements to an agreement not to process that charge
further...."

Despite the statutory emphasis on conciliation and the regulations authorizing

pre-determination settlements, Congress did not explicitly provide for federal
enforcement of negotiated settlements involving the Commission as a party.
Section 706(f)(3) does generally provide for federal jurisdiction over "actions
brought under" Title VII, but the question remains whether a suit brought to
enforce a pre-determination settlement agreement is one brought directly under
Title VII.7 To answer this question, we will examine the role of Commission
initiated settlements in the Title VII statutory scheme.

III.
9

Encouraging voluntary compliance with Title VII is among the Commission's

most essential functions. See EEOC v. Raymond Metal Products Co., 530 F.2d
590, 596 (4th Cir.1976); Patterson v. American Tobacco Co., 535 F.2d 257,
272 (4th Cir.), cert. denied, 429 U.S. 920, 97 S.Ct. 314, 50 L.Ed.2d 286 (1976).
Indeed, when the Commission was created in 1964, it had power only to
investigate complaints and negotiate voluntary compliance. Not until Congress
amended the Act in 1972 did it give the Commission authority to seek federal
court enforcement of Title VII. See EEOC v. Cleveland Mills Co., 502 F.2d
153, 155 (4th Cir.1974), cert. denied, 420 U.S. 946, 95 S.Ct. 1328, 43 L.Ed.2d
425 (1975). In Alexander v. Gardner-Denver Co., 415 U.S. 36, 44, 94 S.Ct.
1011, 1017, 39 L.Ed.2d 147 (1974), the Supreme Court stated that:

Cooperation and voluntary compliance were selected as the preferred means for
10
achieving this goal [of assuring equality of economic opportunity]. To this end,
Congress created the Equal Employment Opportunity Commission and established a
procedure whereby existing state and local equal employment opportunity agencies,
as well as the Commission, would have an opportunity to settle disputes through
conference, conciliation, and persuasion before the aggrieved party was permitted to
file a lawsuit.
11

The importance of settlements to Title VII's statutory scheme is reflected in two

recent Court of Appeals decisions holding that a suit brought by the
Commission to enforce a post-determination conciliation agreement is one
brought directly under Title VII with federal jurisdiction provided by Sec.
706(f)(3). In EEOC v. Liberty Trucking Co., 695 F.2d 1038 (7th Cir.1982), the
Seventh Circuit noted that Congress did not explicitly provide for federal
enforcement of conciliation agreements, but the court found that Title VII's
statutory emphasis on voluntary compliance "will be undermined by a holding
that the federal courts lack jurisdiction over suits seeking enforcement of
conciliation agreements." 695 F.2d at 1043. The court concluded that the
potentially conflicting standards the Commission could face if enforcement
were left solely to state courts might "inadvertently undermine Congress'
commitment to conciliation." 695 F.2d at 1044. It therefore held that:

12an EEOC action to enforce a conciliation agreement is an action brought directly

...
under Title VII, and the federal district courts have jurisdiction over such actions.
13

Id.

14

The Fifth Circuit in EEOC v. Safeway Stores, 714 F.2d 567 (5th Cir.1983) did
not share the Seventh Circuit's concern with the adequacy of state
enforcements, but it agreed that federal jurisdiction may be "predicated upon
the primacy of conciliation to the Title VII statutory scheme." 714 F.2d at 572.
The court stated:

15it would be illogical to conclude that Congress intended exclusive state

...
jurisdiction, that there be no federal jurisdiction to consider or enforce the voluntary
agreements it designated as the primary means of accomplishing its goal of
eliminating employment discrimination. We hold, therefore, that federal jurisdiction
to enforce conciliation agreements exists directly under Title VII by means of 42
U.S.C. Sec. 2000e-5(f)(3). We agree with the court below that the usefulness of
conciliation agreements as vehicles for voluntary resolution of employment
discrimination charges would be "significantly reduced" if the agreements were not
enforceable in the forum which is most familiar with Title VII litigation.

16

714 F.2d at 573 (footnote omitted). See also EEOC v. Mississippi Baptist
Hospital, 12 FEP Cases 411, 412 (S.D.Miss.1976) ("critical nature of
conciliation agreements in the enforcement of Title VII" supports exercise of
jurisdiction to enforce conciliation agreements under Sec. 706(f)(3) and 28
U.S.C. Secs. 1337 and 1343(4)).8 IV.

17

Pre-determination settlement (PDS) agreements are no less effective in

facilitating the Commission's essential role as a mediator than conciliation
agreements. By allowing more frequent settlements, the PDS saves resources
that might otherwise be consumed in litigation and furthers the statutory goal of
voluntary compliance. In addition, it enhances the aim of rapidly resolving
disputes by encouraging early resolution before the Commission is required to
expend time in investigations and reasonable cause determinations.

18

This latter feature is the sole factor distinguishing the PDS from conciliation
agreements, and it is this distinction that has led one circuit to conclude that
PDS agreements, as opposed to conciliation agreements, may not be enforced in
federal court.9 In EEOC v. Pierce Packing Co., 669 F.2d 605 (9th Cir.1982),
rehearing denied June 9, 1982 (decided before Liberty Trucking or Safeway
Stores ), the Ninth Circuit held that although the Commission could resolve
charges through a PDS, the regulation allowing such resolutions "does not
permit court involvement predicated on breach of a settlement agreement,
absent reasonable cause determination and good faith attempts at conciliation."
669 F.2d at 608. The court distinguished conciliation agreements from the PDS
by noting that the former followed investigation, determination of reasonable
cause and attempts at conciliation. The court held that Sec. 706(f)(3) was
insufficient to sustain jurisdiction because to so hold would allow the
Commission to use PDS agreements to "leapfrog" jurisdictional requirements
when Title VII violations were charged.

19

Although the court in Pierce Packing framed its holding in broad terms, the
facts of that case distinguish it from the situation now under consideration. In
Pierce Packing, Pierce settled by agreeing to post job vacancies, let women bid
on jobs, transfer seniority for women who switched jobs, and implement an
affirmative action program. Two years later, the Commission conducted a
compliance review finding continued sex discrimination. Specifically, the
review revealed sex segregated departments and job classifications with
resulting pay disparity and discriminatory layoff policy. 669 F.2d at 606. The
Commission then filed a complaint alleging that Pierce intentionally engaged in
unlawful employment practices in violation of Title VII. 669 F.2d at 607. Thus,
in Pierce Packing the Commission did try to "leapfrog" the jurisdictional
prerequisites of Sec. 706(f)(1). Although on appeal in Pierce Packing, the

Commission may have argued in the alternative for specific enforcement, see
669 F.2d at 608, the complaint which was dismissed did not so limit itself.
20

In contrast, the Commission in this case seeks enforcement of a specific

agreement without any ruling on the underlying charge of intentional
employment discrimination. The damages sought arise from the breach of the
agreement rather than from a generalized employment discrimination charge,
and unlike the Commission's complaint in Pierce Packing, the complaint below
does not seek to change Beck's general hiring or promotion practices. In a case
such as the one before us, there is no reason to distinguish PDS agreements
from conciliation agreements. Both promote the statutory goal of voluntary
compliance and neither subverts other provisions of Title VII.

V.
21

We hold that where an employer allegedly breaches a pre-determination

settlement agreement after voluntarily entering into it, and the Commission
seeks enforcement of that agreement only, without attempting to litigate the
underlying unfair employment practice charge, the suit is brought directly
under Title VII, and the United States District Courts have jurisdiction under
Sec. 706(f)(3).10 This holding is consistent with our decisions allowing
enforcement of settlement agreements under the National Labor Relations
Act.11 See, e.g., Poole Foundry & Machine Co. v. NLRB, 192 F.2d 740 (4th
Cir.1951). In George Banta Co. v. NLRB, 604 F.2d 830, 838 (4th Cir.1979),
cert. denied, 445 U.S. 927, 100 S.Ct. 1312, 63 L.Ed.2d 759 (1980), we stated
that "[t]o permit a party to accept the benefits of a settlement agreement, and
then withdraw from that agreement without complying with its corresponding
obligations, would subvert the settlement process." We now agree with a
similar conclusion reached by the district court in EEOC v. Cleveland State
University, 28 FEP Cases 441, 444 (N.D.Ohio 1982) which stated:

22 prohibit the EEOC from summarily enforcing pre-determination settlements

To
would allow an employer to engage in dilatory tactics which would frustrate the
congressional intent of rapid resolution of disputes. If the EEOC had to pursue the
usual process [of investigation and reasonable cause determination] before enforcing
a pre-determination settlement, such agreements would be meaningless.
23

Exercising jurisdiction in this case does not allow the Commission to leapfrog
the jurisdictional prerequisites to a Sec. 706(f)(1) action alleging unfair
employment practices, nor does it undermine those prerequisites. The
requirements of investigation, determination of reasonable cause, and attempts
at conciliation serve to protect employers from frivolous or premature unfair

employment practice suits brought by the Commission. This function is not

affected by our holding. Enforcement of the settlement agreement in this case
will not involve litigation of the underlying unfair employment practice charge;
it will be limited to issues of contract law. Federal jurisdiction is extended to
this case not because it involves a violation of Title VII but because it is
essential to preserving the EEOC's function as an efficient conciliator, a
function that is central to Title VII's statutory scheme. Cf. Safeway's Stores, 714
F.2d 567; Liberty Trucking, 695 F.2d 1038. Accordingly, we reverse the
district court's order dismissing the suit and remand for further proceedings.
24

REVERSED AND REMANDED.

42 U.S.C. Sec. 2000e-5(f)(1)

42 U.S.C. Sec. 2000e-5(f)(3)

42 U.S.C. Sec. 2000e-5(b)

The backlog had grown from 2300 charges after the first year of the
Commission's operation, to 106,700 charges still pending at the end of Fiscal
Year 1975. EEOC Tenth Annual Report FY 1975 at 33

In its first year, the new system resulted in an increase in settlements and
conciliations from 14 percent of all claims under old procedures to 48 percent
under the new system. Hearings Before the Subcommittee on Employment
Opportunities, House Committee on Labor and Education, 95 Cong.2d Sess.
Nov. 1978 (Testimony of Eleanor Holmes Norton) at 6. In fiscal year 1980, 46
percent of all Title VII charges were settled--13,363 by negotiated predetermination settlements (PDS) and 2,725 by other means. EEOC 15th Annual
Report FY 1980, at 36

29 C.F.R. Sec. 1601.19-1601.22

Although we have held that investigation, determination of reasonable cause,

and an effort at conciliation were jurisdictional prerequisites to a civil action
brought by the Commission, EEOC v. American National Bank, 652 F.2d
1176, 1185 (4th Cir.1981), cert. denied, --- U.S. ----, 103 S.Ct. 235, 74 L.Ed.2d
186 (1982), we reached that decision in the context of an unfair employment
practice charge lodged pursuant to Sec. 706(f)(1). These prerequisites clearly
do not apply to a Sec. 706(f)(2) civil action for preliminary relief. Moreover,
Sec. 706(f)(3) mentions no prerequisite in broadly providing for federal district
court jurisdiction over "actions brought under" Title VII

Many other federal courts have exercised jurisdiction over enforcement suits
without discussion of the issue. See, e.g., EEOC v. Contour Chair Lounge Co.,
596 F.2d 809 (8th Cir.1979) (jurisdiction to enforce conciliation agreement
assumed under Title VII); Brito v. Zia Co., 478 F.2d 1200 (10th Cir.1973)
(damages awarded for breach of conciliation agreement without discussion of
jurisdiction); EEOC v. Labor Health Institute, 17 FEP Cases 250
(E.D.Mo.1978) (jurisdiction to enforce conciliation agreement assumed without
discussion)

EEOC v. Pierce Packing, see infra. The Ninth Circuit is the only circuit that has
addressed the question of whether PDS agreements may be enforced in federal
court

10

Because we hold the court below had jurisdiction under Sec. 706(f)(3), we
decline to address the question of whether 28 U.S.C. Secs. 1331 and 1345
provide additional bases for jurisdiction

11

29 U.S.C. Sec. 151 et seq